BANKING OMBUDSMAN SCHEME

BANKING OMBUDSMAN SCHEME

The Banking Ombudsman Scheme is an expeditious and inexpensive forum for bank customers for resolution of complaints relating to certain services rendered by banks.

The Banking Ombudsman Scheme was first introduced in India in 1995, and was revised in 2002. The current scheme became operative from 1 January 2006, and replaced and superseded the banking Ombudsman Scheme 2002.
Presently the Banking Ombudsman Scheme 2006 (As amended up to July 1, 2017) is in operation.
The Banking Ombudsman Scheme is introduced under Section 35 A of the Banking Regulation Act, 1949 by RBI with effect from 1995.

Who is a Banking Ombudsman?

The Banking Ombudsman is a senior official appointed by the Reserve Bank of India to redress customer complaints against deficiency in certain banking services covered under the grounds of complaint.

How many Banking Ombudsmen have been appointed and where are they located?

There are twenty Banking Ombudsmen have been appointed with their offices located mostly in state capitals.

Banks covered under the Banking Ombudsman Scheme, 2006

All Scheduled Commercial Banks, Regional Rural Banks and Scheduled Primary Co-operative Banks are covered under the Scheme.

What are the grounds of complaints?

The Banking Ombudsman can receive and consider any complaint relating to the following deficiency in banking services:

Non-payment or delay in the payment or collection of cheques, drafts, bills etc.;
Non-acceptance, without sufficient cause, of small denomination notes tendered for any purpose, and for charging of commission in respect thereof;
Non-acceptance, without sufficient cause, of coins tendered and for charging of commission in respect thereof;
Non-payment or delay in payment of inward remittances ;
failure to issue or delay in issue of drafts, pay orders or bankers’ cheques;
Non-adherence to prescribed working hours ;
failure to provide or delay in providing a banking facility (other than loans and advances) promised in writing by a bank or its direct selling agents;
delays, non-credit of proceeds to parties’ accounts, non-payment of deposit or non-observance of the Reserve Bank directives, if any, applicable to rate of interest on deposits in any savings, current or other account maintained with a bank ;
complaints from Non-Resident Indians having accounts in India in relation to their remittances from abroad, deposits and other bank related matters;
refusal to open deposit accounts without any valid reason for refusal;
levying of charges without adequate prior notice to the customer;
Non-adherence to the instructions of Reserve Bank on ATM/Debit Card and Prepaid Card operations in India by the bank or its subsidiaries
Non-adherence by the bank or its subsidiaries to the instructions of Reserve Bank on credit card operations
Non-adherence to the instructions of Reserve Bank with regard to Mobile Banking/Electronic Banking service in India by the bank
Non-disbursement or delay in disbursement of pension
Refusal to accept or delay in accepting payment towards taxes, as required by Reserve Bank/Government;
Refusal to issue or delay in issuing, or failure to service or delay in servicing or redemption of Government securities;
Forced closure of deposit accounts without due notice or without sufficient reason;
Refusal to close or delay in closing the accounts;
Non-adherence to the fair practices code as adopted by the bank;
Non-adherence to the provisions of the Code of Bank’s Commitments to Customers issued by Banking Codes and Standards Board of India and as adopted by the bank
Non-observance of Reserve Bank guidelines on engagement of recovery agents by banks;
Non-adherence to Reserve Bank guidelines on para-banking activities like sale of insurance/mutual fund/other third party investment products by banks

A customer can also lodge a complaint on the following grounds of deficiency in service with respect to loans and advances

non-observance of Reserve Bank Directives on interest rates;
delays in sanction, disbursement or non-observance of prescribed time schedule for disposal of loan applications;
non-acceptance of application for loans without furnishing valid reasons to the applicant; and
non-adherence to the provisions of the fair practices code for lenders as adopted by the bank
Non-observance of any other direction or instruction of the Reserve Bank as may be specified by the Reserve Bank for this purpose from time to time.

When can one file a complaint?

One can file a complaint before the Banking Ombudsman if the reply is not received from the bank within a period of one month after the bank concerned has received one’s complaint, or the bank rejects the complaint, or if the complainant is not satisfied with the reply given by the bank.

When will one’s complaint not be considered by the Ombudsman?

One has not approached his bank for redressal of his grievance first.
One has not made the complaint within one year from the date of receipt of the reply of the bank or if no reply is received, and the complaint to Banking Ombudsman is made after the lapse of more than one year and one month from the date of complaint made to the bank.
The subject matter of the complaint is pending for disposal/has already been dealt with at any other forum like court of law, consumer court etc.
Inappropriate complaints, like inappropriate manner or time
The institution complained against is not covered under the scheme.
The subject matter of the complaint is not pertaining to the grounds of complaint specified under Clause 8 of the Banking Ombudsman Scheme.

Procedure for filing the complaint

One can file a complaint with the Banking Ombudsman simply by writing on a plain paper. One can also file it online at or by sending an email to the Banking Ombudsman.
Details required- Name and address of the complainant, the name and address of the branch or office of the bank against which the complaint is made, facts giving rise to the complaint supported by documents, if any, the nature and extent of the loss caused to the complainant, the relief sought from the Banking Ombudsman and a declaration about the compliance with conditions which are required to be complied with by the complainant under Clause 9(3) of the Banking Ombudsman Scheme.

Where can one lodge his/her complaint?

One may lodge his/her complaint at the office of the Banking Ombudsman under whose jurisdiction; the bank branch complained against is situated.

Charges/Fee for filing complaints with Banking Ombudsman

The Banking Ombudsman does not charge any fee for filing and resolving customers’ complaints.

Amount of compensation

The amount, if any, to be paid by the bank to the complainant by way of compensation for any loss suffered by the complainant is limited to the amount arising directly out of the act or omission of the bank or 20 lakhs whichever is lower.
The Banking Ombudsman may award compensation not exceeding 1 lakh to the complainant for mental agony and harassment.

Complaint and Settlement

If the terms of settlement (offered by the bank) are acceptable to one in full and final settlement of one’s complaint, the Banking Ombudsman will pass an order as per the terms of settlement which becomes binding on the bank and the complainant.
If a complaint is not settled by an agreement within a period of one month, the Banking Ombudsman proceeds further to pass an Award. Before passing an award, the Banking Ombudsman provides reasonable opportunity to the complainant and the bank, to present their case.
It is up to the complainant to accept the award in full and final settlement of or to reject it.

Time limit for filing an appeal

One can file the appeal against the award or decision of the Banking Ombudsman rejecting the complaint within 30 days of the date of receipt of the Award, The Appellate Authority may, if he/ she is satisfied that the applicant had sufficient cause for not making an application for appeal within time, also allow a further period not exceeding 30 days.

How does the appellate authority deal with the appeal?

The appellate authority may:

dismiss the appeal; or
allow the appeal and set aside the Award; or
send the matter to the Banking Ombudsman for fresh disposal in accordance with such directions as the appellate authority may consider necessary or proper; or
modify the Award and pass such directions as may be necessary to give effect to the modified award; or
Pass any other order as it may deem fit.

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